Does open source software decrease profit of proprietary software producer and increase social welfare

By extending Cournot model, this paper explores the impact of open source software (OSS) to the price, output and profit of proprietary software (PS) and social welfare in a software market. In this paper, we assume that proprietary software producer aims at maximizing profit, the open source software is freely available and the market exhibits network externality. We find that the appearance of open source software in a software market monopolized by the proprietary software doesn´t necessarily lower the price of proprietary software, decrease the output and profit of proprietary software producer and increase the level of social welfare, what happens in reality depends on the learning (maintenance or development) cost of open source software.